Sir Michael Wilshaw, head of Ofsted, talks to children at St Paul's Way trust school in Bow, east London. Photograph: John Stillwell/PA

The chief inspector of schools, Sir Michael Wilshaw, has urged the government to reintroduce formal tests for seven- and 14-year-olds "for the benefit of children".

In a speech to launch Ofsted's annual report, Wilshaw said more needed to be done if the country was to keep pace with its overseas rivals.

The Ofsted survey of its inspections in the past year showed that nearly eight in every 10 schools were judged to be good or outstanding, the highest proportion in Ofsted's 20-year history.

But Wilshaw said reintroducing national tests would be a way of measuring progress.

"If we are serious about raising standards and catching up with the best in the world, we need to know how pupils are doing at seven, 11, 14 and 16."

The call was immediately criticised by teachers' unions for overemphasising testing at the expense of learning.

Christine Blower, general secretary of the National Union of Teachers, said testing was "an unhelpful step".

"We already have formal assessment in the early years and the phonics check at age five. This is all too much testing too soon," Blower said.

National tests for seven-year-olds were scrapped in 2004, replaced by teacher assessments, while national tests for 14-year-olds – key stage three – were dropped by the previous Labour government in 2009 after a fiasco involving marking and administration.

The current government introduced a phonics test for pupils at the end of year one in primary school, while 11-year-olds take maths and reading tests at key stage two, with a new spelling, punctuation and grammar test added from May this year.

"Talk to any good headteacher and they will tell you it was a mistake to abolish those tests. That's because good teachers use those tests to make sure every child learns well. In getting rid of the tests, we conceded too much ground to vested interests," Wilshaw said.

"Our education system should be run for the benefit of children, and no one else."

Ofsted had statistics from 30 infant schools that had been merged into standard primary schools, showing that the performance of key stage one pupils suffered once they were in primary schools. That suggested that primary schools put more energy into preparing pupils for key stage two tests.

The Department for Education recently held a consultation on tests for young pupils, offering a "baseline assessment" of either a test for four-year-olds entering reception class or tests for seven-year-olds.

A spokesman for the DfE said: "The department launched a consultation on the primary accountability system and will be responding in due course. We expect teachers to take professional responsibility for the accurate assessment of pupils."

There are now 485,000 more primary school pupils and 180,000 more secondary school pupils attending good or outstanding schools compared with a year ago.

"Looking at the evidence across all sectors, there are unmistakable signs that England's education system is gradually improving," said Wilshaw, who attributed some of the improvement to Ofsted's abolition of the "satisfactory" inspection grade being replaced by the notification "requires improvement".